Yahoo Finance What Can We Expect From Apple Inc.’s (NASDAQ:AAPL) Earnings In Next 12 Months?
In September 2018, Apple Inc. (NASDAQ:AAPL) released its earnings update. Generally, analyst consensus outlook seem pessimistic, with earnings expected to decline by -6.2% in the upcoming year compared with the past 5-year average growth rate of 6.8%. With trailing-twelve-month net income at current levels of US$60b, the consensus growth rate suggests that earnings will decline to US$56b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Apple in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
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Can we expect Apple to keep growing?
The 36 analysts covering AAPL view its longer term outlook with a negative sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of AAPL’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of US$60b and the final forecast of US$60b by 2022, the annual rate of growth for AAPL’s earnings is -0.3%. However, if we exclude extraordinary items from earnings, we see that the profits is predicted to rise over time, resulting in an EPS of $14.87 in the final year of forecast compared to the current $12.01 EPS today. Earnings decline appears to be a result of top-line expansion of 1.2%, which is predicted to lag cost growth leading up to 2022. Furthermore, the current 22% margin is expected to contract to 22% by the end of 2022.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Apple, there are three fundamental factors you should look at:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is Apple worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Apple is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Apple? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
